Final Draft EU Technical Standards Amending Systematic Internalisers' Quote Rules

The European Securities and Markets Authority has published a final report and final draft amending Regulatory Technical Standards to amend the RTS on the equity transparency obligations of trading venues and investment firms (Commission Delegated Regulation (EU) 2017/587, known as RTS 1). The Markets for Financial Instruments Regulation requires Systematic Internalisers to make public firm quotes in equity instruments. The quotes must: (i) be at least equivalent of 10% of the standard market size for the quoted instrument; (ii) include both a bid and offer price; and (iii) reflect the prevailing market conditions for that instrument. RTS 1 specifies the concept of "prices reflecting prevailing market conditions" as being "close in price, at the time of publication, to quotes of equivalent sizes for the same financial instrument on the most relevant market in terms of liquidity".

ESMA considers that this concept needs to be further elaborated and consulted on proposed amendments last year. ESMA has not made any changes to its proposal. The final draft amending RTS provide that the quotes of an SI can only adequately reflect prevailing market conditions when the quotes reflect the minimum price increments ('tick sizes') quoted for a financial instrument on a trading venue.

ESMA also consulted on other amendments to RTS 1 to correct changes that were made to the original RTS when it was published in the Official Journal of the European Union. ESMA believes the corrections are needed to avoid inconsistent application of the requirements. There have been no further changes to those previously proposed amendments.

RTS 1 has been directly applicable across the EU since January 3, 2018. ESMA has submitted the final report to the European Commission for consideration. The final amendments will only enter into force once the amending RTS are published in the Official Journal of the European Union.

View ESMA's final report.

View RTS 1.